HBS's counsel attended the January 9 mediation, in person, accompanied by an HBS representative and also a representative of HBS's insurer (both in person). Attorneys from the firm of Fields & Brown, LLC, physically attended on behalf of Prudential.

HBS contended, and Prudential did not dispute, that Prudential failed to send a party representative to the mediation.

The case did not settle at mediation and, according to HBS, very little progress was made.

After the January 9 mediation, HBS filed a motion for sanctions, based on Prudential's failure to send a party representative to attend the mediation in person.

Specifically, HBS sought to recover its attorneys' fees and out-of-pocket expenses directly associated with preparing for and participating in the mediation.

Prudential claimed that two representatives, each of whom had full settlement authority, had “attended” the mediation by telephone. Prudential asserted that its vice president and corporate counsel, Michael Fierro, was “present throughout the day via telephone to participate fully in all conversations,” and that a business representative, James Mason, “would provide additional input on any inquiry” as necessary.

Kansas Rules of Procedure

D. Kan. Rule 16.3(c)(2) provides:

Attendance by a party or its representative with settlement authority at the mediation is mandatory, unless the court orders otherwise. The purpose of this requirement is to have the party or representative who can settle the case present at the mediation.… The parties' attorney(s) responsible for resolution of the case must also be present.

The Court's Decision

The court granted HBS's motion.

The court said that it “flatly disagree[d]” with Prudential's argument that “[g]iven the structure of the mediation as determined by the mediator (no face to face communication between the parties during the mediation), presence by telephone and physical presence in this case is a distinction without substance.”

The court conceded that participation by telephone of a party representative who had knowledge of the facts of the case and who had full, meaningful settlement authority was preferable to the physical presence of a party representative who did not really know the facts of the case or who lacked complete authority to settle the case. It said, however, that that “misses the point.”

According to the court, whatever the structure of the mediation in this case, Prudential “presumptuously and unilaterally left the mediator without the option of bringing the parties together face-to-face.” This option, the court added, might have become “increasingly attractive throughout the six-hour mediation, with each party asserting the other's failure to negotiate in good faith.”

The court also pointed out that nothing in the record suggested “that Prudential ever extended HBS the simple courtesy of providing advance notice that a company representative with authority wouldn't be attending in person, nor that the mediator pre-approved anything along those lines.”

The court then ruled that sanctions were warranted. (It noted that this was not the first instance in this litigation in which sanctions had been imposed against Prudential for failure to comply with the court's orders.)

HBS had submitted a statement of its attorneys' fees and expenses associated with preparing for and participating in the mediation; Prudential did not take issue with the total amount of fees and expenses sought, the rates, or any specific entry. The court said that it conducted an independent review of the fees and expenses claimed by HBS and said that, although they were “arguably on the high side,” given the detail and complexity of the damages claimed by Prudential, the fees and expenses were reasonable.

The court concluded that, “[a]side from a clear violation of the court's local rules, it would seem fundamentally unfair to make HBS 'eat' those considerable expenses when it properly prepared for and participated in the mediation, while Prudential clearly did not.”

Accordingly, the court directed Prudential to pay sanctions to HBS in the amount of $13,910.98.

The case is Prudential Ins. Co. of America v. Hawker Beechcraft Global Customer Support, LLC, No. 16-2380-DDC (D. Kan. Feb. 14, 2017).